Electronic boards are seen at Madrid stock exchange which plummeted after Britain voted to leave European Union in EU BREXIT referendum, in Madrid

Electronic boards are seen at the Madrid stock exchange which plummeted after Britain voted to leave the European Union in the EU BREXIT referendum, in Madrid, Spain, June 24, 2016. REUTERS/Andrea Comas

By David Randall

NEW YORK - Another steep decline in the Turkish lira on Friday pushed emerging market equities lower and kept other world markets cautious, overshadowing hopes that an upcoming U.S.-China meeting would resolve concerns over trade tariffs.

The Wall Street Journal reported on Friday afternoon that Chinese and U.S. negotiators are drawing up a road map for their trade talks next week. Both countries aim to resolve an escalating tariff war.

A Chinese delegation led by Vice Minister of Commerce Wang Shouwen will meet U.S. representatives, China's Ministry of Commerce said on Thursday.

The world's two largest economies are due to impose tariffs on billions of dollars of each other's goods on Aug. 23, in addition to levies that took effect on July 6.

"There is still a great deal of difference between agreeing to talk and coming to an agreement," said CMC Markets analyst Michael Hewson.

"For now it appears an escalation has become less likely, hence (Thursday's) rebound in equity markets," he added, referring to an overnight rally on Wall Street.

U.S. stocks climbed in afternoon trading after a Mexican economic official told reporters that trade talks between the United States and Mexico were "advancing well."

"Any conversations we have with China to come up with a deal and any conversations we have with Mexico would be seen as a win for the U.S." said Jeffrey Frankel, president at Stuart Frankel & Co in New York.

The pan-European FTSEurofirst 300 index <.FTEU3> lost 0.09 percent.

MSCI's All-Country World index <.MIWD00000PUS>, which follows shares in 47 countries, rose 0.3 percent, notching its first weekly gain in two weeks.

Turkey's lira tumbled as much as 8.5 percent to 6.3 per dollar <TRY=D3>, having recovered ground rapidly in recent days. It was last down by about 4 percent.

The currency plunged to a record low of 7.24 per dollar at the start of the week as worsening relations between Turkey and the United States added to losses driven by concerns over President Tayyip Erdogan's influence over monetary policy. The currency has lost a third of its value this year.

The United States warned Turkey to expect more economic sanctions unless it hands over detained American pastor Andrew Brunson, as relations between the two countries took a further turn for the worse.

Memories of past emerging market crises, such as the Asian financial turmoil of 1997 and Turkey's 2001 crisis, haunted investors this week and prompted selling across emerging market assets as a whole. That left emerging market stocks in a technical bear market, or down 20 percent from recent highs.

European banks <.SX7P> and copper <CMCU3> also fell into bear market territory.

The dollar dipped against a basket of six major currencies <.DXY>, moving further away from its highest levels since June 2017 hit earlier this week as investors bought the U.S. currency in a flight to safety.

U.S. crude <CLcv1> rose 0.58 percent to $65.84 per barrel and Brent <LCOcv1> was last at $71.73, up 0.42 percent on the day.

Benchmark 10-year U.S. Treasury notes <US10YT=RR> last rose 2/32 in price to yield 2.8659 percent, from 2.871 percent late on Thursday.